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Video: Geithner explains banking plan

Treasury Secretary Timothy Geithner made the rounds of Washington talk shows Sunday to make the case that the government’s efforts to bailout the financial system are on track. Geithner also said the Treasury has about $135 billion left in bailout funds and that, if more is needed, “we’ll cross that bridge when we come to it.”

Geithner and the Obama administration have faced withering criticism from some members of Congress for their handling of the $700 billion financial rescue program approved last fall. On Sunday, he defended the need for massive government intervention to get credit flowing again to reverse the deepening recession.

"The classic lesson of financial crises is governments wait to act,” Geithner told NBC’s "Meet the Press." “They wait too late. And that means more damage to the economy, higher deficits in the future and greater cost to the taxpayer. And we’re not prepared to take that approach.”

(Msnbc.com is a joint-venture of Microsoft and NBC Universal.)

In concert with the Federal Reserve, the Treasury has unleashed trillions of dollars in loans and spending in a multi-pronged effort to fix the credit markets and get the economy growing again. The list includes direct investments in banks, financial incentives to get lenders to stop foreclosures and, most recently, a plan to let private investors borrow government money risk-free to buy up dicey loans and other investments that are clogging the banking industry’s books.

“Credit is like the blood — it’s like the oxygen of any economy,” Geithner said. “For us get the economy growing again we need to makes sure there’s going to be credit available to business and families across the country.”

Geithner said the government’s efforts are already beginning to show results in the mortgage market, where rates have fallen. The typical American family that refinances to a lower rate can save roughly $2,000 a year, he said.

“That’s a substantial amount of resource they can spend on thing that will help to get this economy growing again,” said Geithner. “Where we’re acting you’re seeing progress and impact.”

Geithner said the Treasury estimates it has about $135 billion in funds left from the so-called Troubled Asset Relief Program — or TARP — money Congress authorized in October. That includes money the Treasury expects to get back from banks that have already taken funds, Geithner said.

Some of that money will likely be needed to provide further relief to the nation’s ailing auto industry. President Obama is expected to announce the latest round of help for car companies this week.

Originally intended to buy up bad bank assets, the TARP plan touched off a firestorm of protest in Congress last year when former Treasury Secretary Henry Paulson abruptly changed course and gave $200 billion of the money directly to banks in exchange for stock.

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Since then, there’s been little support on Capitol Hill for additional funding if the remaining TARP money doesn’t go far enough.

“We have substantial resources,” Geithner told ABC’s “This Week.” “And we’re going them use them as quickly and as carefully as we can and make sure they’re devoted to getting credit flowing again. We’ll cross that bridge when we come to it in terms of whether we need additional resources.”

Critics of the Obama administration’s massive intervention in the financial markets have also expressed concerns about the equally massive budget deficits brought on by the TARP program and the $787 billion economic stimulus package enacted earlier this year. Geithner defended the huge increase in spending by saying the investment would pay off in the long run.

“The cost of fixing the crisis is going to require larger deficits in the short term,” he said. “But the best way to make sure we get those deficits down it the future is to get recovery established and make the economy stronger going forward.”

Geithner also fended off criticisms off the government’s rescue of failed insurance giant AIG, including the payment of large bonuses to the executives who made the risky, multi-billion-dollar bets that sank the company. He said the contracts awarding those bonuses were signed before the current administration took office.

“We had no good choices,” he said. “Were a nation of laws. We cannot get the economy going again if there’s and an expectation that the government is going to come in a break contracts. It’s just not a tenable thing to do.”

The current bailout plan, he said, will provide for greater accountability from bank managers and include conditions to protect the taxpayers.

And while he said he understands the anger and frustration with the Treasury’s programs, Geithner said the harsh personal criticism has not been unexpected.

“This job comes with a lot of heat by definition,” he said. “There’s nothing surprising in that.”

Geithner also said he expects that one silver lining to the financial crisis will be a stronger economy less reliant on unsustainable borrowing.

“When we get though this people are going to care less about what they make, more about what they do, what they achieve with what they make,” he said. “And that will make this country stronger.”